Sept. 7 (Bloomberg) -- Saab Automobile, the 64-year-old
Swedish carmaker that halted production in June, applied for
court protection from creditors in a bid to raise money to
restart operations and avoid a bankruptcy petition by unions.

“The reorganization is a move to stabilize the company in
this tremendously rocky period,” Chief Executive Officer Victor
Muller said in an interview today at the company’s headquarters
in Trollhaettan.

The carmaker is seeking a court administered voluntary
restructuring for the second time in as many years after
previous owner General Motors Co. began liquidating Saab Auto at
the beginning of 2009. GM eventually sold Saab to Spyker Cars NV
in February last year for about $400 million in cash and shares.

Saab Auto traces its roots to aircraft company Svenska
Aeroplan AB, founded in 1937 to secure production of Swedish
warplanes, and is based in Trollhaettan, a cradle of the
country’s 19th-century industrialization. GM bought one half of
Saab in 1990 and took full ownership a decade later.

“Everyone here is rooting for Saab to succeed but this
time it seems to be over,” said Martin Johansson, a 21-year-old
cashier at a Trollhaettan gas station who has family friends
working at the carmaker. “It would be wonderful if they make it
but I don’t think they will.”

Saab ran into a cash crunch as sales suffered last year
after it took longer than expected to restore production and
roll out the new 9-5 sedan after GM had emptied the factory of
equipment in January 2010 amid the planned shutdown.

Plant Silent

The carmaker, which aimed to become profitable in 2012 and
sell 120,000 autos, first suspended production in March as
funding dried up. After brief restarts, the Trollhaettan plant
has been silent since early June. Saab delayed paying wages last
month, the third consecutive postponement, prompting labor
leaders to start a process that could have led to a bankruptcy
declaration. They said today they’ll hold off.

The filing, made at the Vaenersborg District Court, will
lead to a voluntary reorganization that will last from three
months to a year, Saab said today. The manufacturer plans to
present a restructuring plan to its creditors within three
weeks, it said. The court will rule on whether to accept the
reorganization filing tomorrow, it said on its website.

Swedish Automobile, Spyker’s new name, has dropped 79
percent this year, valuing the Zeewolde, Netherlands-based
company at 16.7 million euros ($23.5 million). Trading in the
shares was suspended in Amsterdam at the request of the
regulator, NYSE Euronext said.

Aerodynamic Design

“A reorganization makes sense because it buys Saab some
time,” said Tom Muller, an analyst at Theodoor Gilissen in
Amsterdam. “But they absolutely still have to come up with a
lot of new funds very quickly.”

Saab entered the U.S. market in 1957 with the 93 model and
became internationally known for aerodynamic design that gave a
nod to its aviation history. The brand gained a reputation for
being offbeat, practical and safe. Features and innovations that
defined Saab for decades included headlight wipers, self-repairing bumpers and side-impact door beams.

Saab during the last two decades lost much of the
quirkiness that had defined the carmaker as GM pushed it to
share parts, engines and chassis with Opel and other brands in
the group. In 2009, crisis-hit GM put Saab on the block as one
of four brands marked for sale or liquidation.

Another Chance

Saab today proposed Guy Lofalk, the Swedish lawyer who
oversaw its reorganization under GM two years ago, to handle the
restructuring. The administrator can apply for state guarantees
to pay workers and Saab expects wages to be paid shortly after
court approval, it said.

“A reorganization would be much quicker than a bankruptcy
process in ensuring that our members get their state salary
guarantee,” said Darko Davidovic, counsel at the IF Metall
union, which represents about 1,500 Saab workers. “It also
gives Saab another chance.”

Saab owes suppliers about 150 million euros, Muller said,
adding that the carmaker is “pretty” close to securing a bridge
loan. The CEO has vowed to pay back 100 percent of the money,
Lars Holmqvist, president of Clepa, the European auto supplier
group, said at an industry conference in Gothenburg, Sweden.

“I’m still skeptical about Saab’s chances but am actually
more optimistic than I was a week ago,” Holmqvist said in an
interview.

Sales Peak

Saab sales peaked at 133,000 vehicles in 2006 and have been
on a downward trajectory since then. Last year it sold 31,696
cars, below an original target of between 50,000 and 60,000.

“We have done everything we can, given that we have to
safeguard taxpayers’ money and not risk it in very insecure
businesses,” Swedish Finance Minister Anders Borg told
reporters in Stockholm.

Financing to exit reorganization would be provided by
agreements with Pang Da Automobile Trade Co. and Zhejiang
Youngman Lotus Automobile Co. if they receive approval, the
carmaker said.

Swedish Automobile agreed in June to sell a 29.9 percent
stake to Zhejiang Youngman for 136 million euros. Pang Da,
China’s biggest dealer by market value, offered to pay 109
million euros for a 24 percent stake. Regulators and GM must
still approve the deals.

“ We don’t want to see them go bankrupt,” Huang Zhiqiang,
head of Zhejiang Youngman’s sales unit, said in an e-mail. “If
they do so, they’ll suffer major losses to their assets,
especially to their brands.”

Ally Financial Inc., Saab’s financing partner in the U.S.
and Europe, said it would continue to provide loans to Saab
dealers and consumers during the reorganization process, the
company said today.

“We still have some hopes, but when they can’t pay salaries
you know it’s near the end,” said Maria Salo, who runs a
cleaning firm in Trollhaettan and whose husband works
at Saab doing equipment maintenance. “I’m just glad we both
don’t work there.”